The Changing World of Magnesite Editor, Industrial Minerals 3 rd China Liaoning International Magnesia Materials Exposition 20-24 24 September, Shenyang, China
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Outline 1. The big picture the tide has turned 2. Influencing factors 3. Western magnesia capacity developments 4. Corporate activity 5. Market outlook 6. Summary & conclusions
1. Big picture the tide has turned A sea change in magnesia supply sector Chinese supply no longer export driven Global consumers seeking alternative sources Market growth opportunities Surge in capacity expansion plans 2008-2010 2010 Diversification/return by western sources to FM/DBM
2. Influencing factors Previously. Chinese magnesia supply dominated world markets mid-1980s to mid-2000s Lower cost Chinese DBM/FM lured consumers Certain western DBM producers diversified or exited altogether, eg. Britmag, Sardamag, H eg. Britmag, Sardamag, H-W, National Magnesia, Asahi, Baymag (FM), DSP (DBM) DBM/FM capacities/projects mothballed
2. Influencing factors Previously.
2. Influencing factors The China factor Since 2006 govt. policy cooling the economy Export VAT rebate abolition Introduction of new export taxes Export license system increased licence cost, reduced export quotas
2. Influencing factors The China factor Early 2006: a leading trader commented: I I feel that once the Chinese government is introducing a new tax to curb the export of minerals, obviously they do not worry about the competitiveness of Chinese minerals in the international market any more.
2. Influencing factors The China factor Early 2006: a leading trader commented: The overseas buyer will either be forced to pay a significantly higher price for Chinese minerals or buy from an alternative source.
2. Influencing factors The China factor Sustainable development raw material conservation Decline in quality & availability of high grade feedstock Crackdown on smuggling Olympic Games Economic boom of China rapidly growing domestic demand
2. Influencing factors Other factors Freight increasing costs, availability & congestion problems Energy price rises Buoyant demand in certain markets
2. Influencing factors The result. 1. Price increases
2. Influencing factors The result. 2. Shortage of supply 3. Opportunity knocks for suppliers outside China
2. Influencing factors The result. A developing western producer & consumer stated: At the end of 2009 we should be independent regarding supply of [Chinese] DBM and FM. A A similar strategy should be the base for any serious producer of magnesia based refractory products.
3. Western capacity developments Baymag CCM,DBM,FM Mag de Rubian CCM Magnezit CCM,DBM,FM Premier CCM Penoles CCM,FM MMMS CCM Bommag DBM,FM Kumas DBM,FM DSP CCM RHI-Jinding DBM Tata Ref. DBM Qmag CCM, DBM,FM Magnesita DBM
3. Western capacity developments Bringing on stream by 2010 384,000 CCM 1.2m. DBM MMMS, Manistee, USA 120,750 FM
3. Western capacity developments Kumas, Kutahya, Turkey Nedmag, Veenam, the Netherlands
3. Western capacity developments Baymag, Exshaw, Canada Magnesita, Brumado, Brazil Qmag, Rockhampton, Australia
4. Corporate activity Private equity interest - Magnesita, GPI/Gavea - Qmag, RCF M&A - UCM, Imerys - Minco, Penoles - Morton Salt, MMMS - Calmag, Bomex - Slovmag, Magnezit - Dalmia/Eswar - LWB, Magnesita
4. Corporate activity Magnesita/LWB merger
4. Corporate activity Magnesita/LWB merger
4. Corporate activity Speculation - Magnohrom, XXX? - SMZ, XXX? - XXX?, RHI Interest in China - RHI-Jinding - Tata Refractories SMZ, Jelsava, Slovakia
5. Market outlook Refractories DBM, FM 7-8% pa growth to 2012 Steel, cement RHI: The steel sector can look to the future with confidence. BRIC regions
5. Market outlook Refractories DBM, FM
5. Market outlook Refractories DBM, FM
5. Market outlook Environmental - CCM Hydrometallurgy - CCM Specialities - CCM Agrimarkets - CCM
6. Summary & conclusions China still a large producer, but increasingly serving domestic markets, exports to decline Supply shortage to remain tight for 1-21 2 years Western capacity expansions proceed to take and retake market share lost to China earlier More M&A, consumers securing raw material sources Increased interest in new MgO sources/projects See western players expand MgO portfolios in order to meet market demand growth
6. Summary & conclusions Industrial Minerals news page, October 2008
6. Summary & conclusions Thank you for your kind attention Is the tide about to change again for magnesia?